Dendreon: Will Expansion to Europe Boost Sales?
Over the past twelve months, shares in the biotechnology company, Dendreon (NASDAQ:DNDN) have lost more than half their value.
A recent decision by Aetna (NYSE:AET) has increased its health coverage to include patients with an advanced form of metastatic prostate cancer; now the health insurer will pay for patients to receive Provenge, a prostate cancer drug made by Dendreon.
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Following Friday’s announcement, Dendreon’s shares rose 10 percent to $5.10.
Difficulties, however, still haunt the drug manufacturer as Provenge sells more slowly than expected. Last week, the company cut 600 jobs that will cost the Seattle-based company more than $25 million in severance packages according to a regulatory filing. Job cuts came as the result of Dendreon’s July decision to close its Morris Plains, NY manufacturing facility.
While Provenge has not sold well in the United States, Dendreon has embarked on plans to sell the drug in Europe. But the drug, which was approved in the United States in 2010, has yet to be approved in Europe. Furthermore, because the drug is difficult to produce, its manufacturing plants must be approved as well. Trials for the drug began on Thursday.
Once Provenge is approved in Europe, the drug will face problems similar to those affecting sales in the United States: cost and competition. Johnson & Johnson’s (NYSE:JNJ) Zytiga and Sanofi’s (NYSE:SNY) Jevtana are already on the market to treat prostate cancer in Europe and Medivation (NASDAQ:MDVN) has applied for the approval of its drug Xtandi. Provenge’s cost will also be a problem in the region where centralized health care focuses on the cost-to-benefit ratio for medications.
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